Mega-merger poses challenge to China state-run oil giants

Singapore

A MERGER of Sinochem Group and China National Chemical Corp (ChemChina) would create a new oil-refining challenger to established state-run behemoths that dominate the country's fuel-making business.

The prospective tie-up, combining two companies with assets of more than US$100 billion, would create the largest oil refiner behind China Petrochemical Corp (Sinopec) and China National Petroleum Corp (CNPC), according to data from Wood Mackenzie Ltd. The move signals a new strategy by policymakers to boost competition rather than weaken the dominant state-run companies by spinning off assets, according to Nevyn Nah, a Singapore-based analyst with Energy Aspects Ltd.